Shriram Life Insurance prefers to sell traditional moneyback plans instead of Ulips because most of its customers are in rural India...
Shriram Life Insurance prefers to sell traditional moneyback plans instead of Ulips because most of its customers are in rural India. In an interview with Malyaban Ghosh, CEO Manoj Jain says the company doesn’t have a bancassurance partner as it entered the market late.
How are new products doing after the regulatory changes?
Products like guaranteed return plans and assured income plans are more transparent than others as they allow customers to take informed decisions. In such products, the customer knows when to expect returns and, therefore, there’s less disappointment. After having burnt their fingers with Ulips, some customers are more comfortable with guaranteed return products.
A guaranteed return plan is a one-time investment and insurance plan, which provides dual benefits of life cover and guaranteed return on maturity.
In a participating product, the sum assured is guaranteed and payable either on death of the insured or maturity of the plan. Additionally, one also gets revisionary bonus generated by the participating fund of the company. While policyholders get 90% of the surplus, shareholders receive 10%. These products require the insurer to set aside more capital. If a product is long term and the company is on the non-participatory side, the capital required is lesser.
Are customers still interested in Ulips?
Most customers are not interested in Ulips anymore. Even companies are not pushing them because distributors are not keen on selling these products as the return on the efforts made is way inferior than on non-Ulips. We are not selling Ulips because a majority of our customers are from rural India, with limited paying capacity. They prefer traditional moneyback plans.
What are you main sales channels?
We service customers of Shriram Transport Finance through affordable insurance cover with zero distribution cost. These are all term products, both on the group and individual sides. On the group business side, Shriram Group contributes more than 60% of the total new business premium for Shriram Life. However, Shriram Transport contributes around 50%. Similarly, for individual business, Shriram Group contributes close to 50%, but Shriram Transport’s contribution to retail is 8-10% only. Then, we have agencies as other channels. We have just around 6,000 agents, but they are highly productive.
Why don’t you have a bank as a partner to sell your products?
We were late entrants into the market. By the time we came in, most public sector banks had either become corporate agent of some other insurance company or had started their own insurance products. In this context, we are lagging behind. So, we run an in-house bankassurance channel. Shriram Transport, Shriram City Union Finance and Shriram Fortune Solutions are our corporate agents who sell our products. Two years back, we started using the direct channel where well-trained company employees sell life insurance products. We have a small team and are doing reasonably well.
We have opened 210 branches in the last 18 months. Two years back, 80% of our premium was coming from south India, but now it has been reduced to 60%. We have opened 25 branches in UP and 30 in Bihar, Jharkhand and West Bengal. It is very early to get into the cost and productivity of these branches. We also have a tie-up with Muthoot Finance and some other micro-finance institutions and we pay them according to Irda norms.
Where does Shriram Life Insurance stand in the current market?
Since 2006, we have managed to acquire 2% of the total market share in the life insurance sector. Every year, we sell around 1,50,000 policies and every second policy we sell is in rural India. We have assets worth Rs 2,135 crore and our net profit for the second quarter of the current fiscal was Rs 249 crore. We have grown 16% in the current fiscal, both on premium and number of insurance policies sold.